Australian Politics Forum - There Are Three Types Of Flood Insurance Coverage,

qikvtec

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Re: Shonky Flood Insurance Coverage
Reply #30 - Jan 19^th, 2011 at 7:59pm

Equitist wrote on Jan 19^th, 2011 at 7:48pm:

qikvtec wrote on Jan 19^th, 2011 at 7:28pm:

Equitist wrote on Jan 19^th, 2011 at 7:20pm:

The reports of dog acts by insurance companies are starting to flow in...

How can insurance assessors insist on proof of ownership and other evidence from people who have had all (or much) of their paperwork, photos and possessions inundated and/or washed away by freak flood events...!?

I, for one, hope that someone establishes a public name and shame site/page in the industry's dishonour...

PS I thought it was best to tack this post onto an existing thread, rather than start a new one which is likely to overlap considerably.

With respect Thy, I would hope an insurance company insisted on proof of identity and ownership before they sent a payment for my total loss, imagine you lost your home whilst you were away on an extended holiday only to come back to find some scammer has cashed in on your insurance policy.

Fair enough - but that's not exactly what I was getting at...

From the news reports, it is clear that many people will be unable provide evidence of purchase/ownership of some or most of the contents of their homes...

Some have had much of their home contents literally washed away...and have no idea where same ended up...

Others will have been affected by looting - with no means of proving one way or another (regardless of whether they will be hit with 2 excesses for more than one loss event)...

No doubt, many who have suffered inundation up to the waist or ceiling (and therefore a near-total loss of household contents) will be hit by the insurance industry's ultimate trump card - the 'averaging clause'...

Then there's those people who had an excess for flood coverage showing on the front page of their insurance schedule, only to find that buried in the detail is a pissy flood claim limit on contents...

Of course, such clauses will only apply to the minority who were actually covered for "flood" (in one or more of the 3 possible forms) in the first instance...

Given the rampant under insurance in this country, it wouldn't be hard to justify possession of basic household items that would eclipse the sum insured. If you get a hard time from your insurer and don't like the outcome ask them for the contact details for their external dispute resolution provider and tell them immediately you aren't happy with the outcome and you want to lodge a complaint via both their internal and EDR process.

Insurance is a case of buyer beware, if you don't know what you are doing seek advice from someone who does.

Personally I don't agree with the position that you thought you were insured and should therefore have all of your possessions replaced.

I'd support you 100% if you had a legitimate claim, but it is a black and white issue.

As for the piddly fine print a general insurance product must have a plain english pds. In the event you don't wish to or can't decipher the damn thing, simply ask what is and isn't covered.

Insurance comes at a cost, if you want basic coverage you will get relatively generous limits, however if you want extended cover or cover on particular items ask for it.

Some people may find out the hard way about under-insurance and the potential pay-out adjustment that can occur.

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Equitist

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Re: There Are Three Types Of Flood Insurance Coverage,
Reply #31 - Jan 19^th, 2011 at 8:12pm

As it happens, Qiky, I have experience as both a commercial underwriter and claims clerk and consumer claimant...

I've dealt with a number of bizarre claims - and made two of my own...

Within about 6 months, we had 2 claims on separate rental properties insured, inclusive of Landlord Protection cover, through the same Insurer: one being due to an act of human negligence/ignorance by a neighbour, the other a freak storm event...

I should point out that I was pleasantly-surprised by the manner in which the Insurer (Commonwealth Insurance) handled both claims...

As regards the current handling of the flood event/s, the magnitude of the aggregated losses will doubtless create temptation for Insurers to unconscionably-squeeze vulnerable policyholders to unfair limits - hence the name and shame angle...

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Equitist

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Re: Shonky Flood Insurance Coverage
Reply #32 - Jan 19^th, 2011 at 8:25pm

qikvtec wrote on Jan 19^th, 2011 at 7:59pm:

If you get a hard time from your insurer and don't like the outcome ask them for the contact details for their external dispute resolution provider and tell them immediately you aren't happy with the outcome and you want to lodge a complaint via both their internal and EDR process.

That is good advice - it is the best way to hold them to account.

Quote:

In the event you don't wish to or can't decipher the damn thing, simply ask what is and isn't covered.

Good in theory but difficult in practice - since it is difficult to imagine the full range of potential losses that may occur (even harder to match them to a policy definition).

Quote:

Some people may find out the hard way about under-insurance and the potential pay-out adjustment that can occur.

This is one of the most difficult and potentially-heartbreaking aspects of household insurance - hence I personally lean more towards over-insurance...

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qikvtec

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Re: Shonky Flood Insurance Coverage
Reply #33 - Jan 19^th, 2011 at 8:41pm

Equitist wrote on Jan 19^th, 2011 at 8:25pm:

qikvtec wrote on Jan 19^th, 2011 at 7:59pm:

If you get a hard time from your insurer and don't like the outcome ask them for the contact details for their external dispute resolution provider and tell them immediately you aren't happy with the outcome and you want to lodge a complaint via both their internal and EDR process.

That is good advice - it is the best way to hold them to account.

Quote:

In the event you don't wish to or can't decipher the damn thing, simply ask what is and isn't covered.

Good in theory but difficult in practice - since it is difficult to imagine the full range of potential losses that may occur (even harder to match them to a policy definition).

Quote:

Some people may find out the hard way about under-insurance and the potential pay-out adjustment that can occur.

This is one of the most difficult and potentially-heartbreaking aspects of household insurance - hence I personally lean more towards over-insurance...

If you purchased a house in a flood prone area, or even one near enough a waterway, would it not be prudent to ensure you were adequately covered for an almost certain event?

The biggest issue is that most are prepared to take the cheapest policy rather than one that represents good value the opportunity cost of which is under insurance.

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Politicians and Nappies need to be changed often and for the same reason.

One trouble with political jokes is that they often get elected.

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Equitist

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Re: Shonky Flood Insurance Coverage
Reply #34 - Jan 19^th, 2011 at 9:00pm

qikvtec wrote on Jan 19^th, 2011 at 8:41pm:

Equitist wrote on Jan 19^th, 2011 at 8:25pm:

qikvtec wrote on Jan 19^th, 2011 at 7:59pm:

If you get a hard time from your insurer and don't like the outcome ask them for the contact details for their external dispute resolution provider and tell them immediately you aren't happy with the outcome and you want to lodge a complaint via both their internal and EDR process.

That is good advice - it is the best way to hold them to account.

Quote:

In the event you don't wish to or can't decipher the damn thing, simply ask what is and isn't covered.

Good in theory but difficult in practice - since it is difficult to imagine the full range of potential losses that may occur (even harder to match them to a policy definition).

Quote:

Some people may find out the hard way about under-insurance and the potential pay-out adjustment that can occur.

This is one of the most difficult and potentially-heartbreaking aspects of household insurance - hence I personally lean more towards over-insurance...

If you purchased a house in a flood prone area, or even one near enough a waterway, would it not be prudent to ensure you were adequately covered for an almost certain event?

The biggest issue is that most are prepared to take the cheapest policy rather than one that represents good value the opportunity cost of which is under insurance.

The problem with the under-insurance on contents, is that many people seem to think that they will be able to make a claim for the full sum insured (in the event of a total loss) and either refurnish more sparsely and/or with lower quality goods...

If someone has insured their home contents for (say) $20,000 but their contents are retrospectively-assessed at a replacement value of $40,000 after they have suffered (say) a 50% loss, they might be surprised that the insurer will only offer to pay out $10,000 (if they're lucky)...

After all, they have effectively suffered a loss of only 1/2 of the 1/2 of the contents that they had insured...

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Equitist

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Re: There Are Three Types Of Flood Insurance Coverage,
Reply #35 - Jan 19^th, 2011 at 9:08pm

Following on from my previous post, here's a worked example from a randomly-chosen Insurance web-site: -

http://www.fitzpatrick.com.au/infopages/property-infoE.html

Quote:

Under Insurance - The Average Clause and How it Works

Some policies contain what is known as an Average or Co-Insurance clause. The unusual impact of these types of clauses is that if you underinsure i.e. Not insure to the full value or the amount of insurance limit purchased is inadequate, your claim may be reduced in proportion to the amount of the under-insurance.

For example:

Full Replacement Value of Building $1,000,000

Sum Insured under the policy $500,000

Therefore you would be self insured for 50% of the full value

Amount of claim, say $100,000

Amount payable by Insurers $50,000

as a result of the application of Average/Co-Insurance (being 50% of the $100,00)

The average clause usually applies to:

Property Insurance;

Consequential Loss Insurance;

It goes on with this: -

Quote:

Areas that are always of concern to our clients are the adequacy or otherwise of:

Replacement Values for Assets;

Declaration of values for Consequential Loss of either Gross Profit, Gross Rentals and/or Additional Increased Costs of Working.

It is preferable that you:

Obtain periodical valuations by recognised quantity and building surveyors. Changes to the Building Code and Town Planning requirements need to be considered as part of any review or rebuilding costs;

Where previous valuations have been obtained when reviewing building values, make allowance for building cost increases since your last valuation, allowing for lead times for council approval and the like;

Take into account in respect of replacement costs for plant and machinery, increases in the cost of imports from some countries that can occur due to currency fluctuations. We recommend that you also take current and future inflationary trends into consideration in addition to import duties and effects on values of technological changes.

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Equitist

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Re: There Are Three Types Of Flood Insurance Coverage,
Reply #36 - Jan 19^th, 2011 at 9:39pm

Team Froggie wrote on Jan 14^th, 2011 at 1:58pm:

aussiefree2ride wrote on Jan 14^th, 2011 at 1:14pm:

Please delete wrote on Jan 14^th, 2011 at 8:31am:

"Boswell is suggesting that the flood component of all insurance premiums be directed to central fund, in an attempt to eliminate this fault in the system"

Is this a new thing? That wasn't what he was suggesting the other day - he was proposing to add a levy to ALL insurance policies, to build a fund for natural disasters.

Do you even understand your hero's proposal?

Keep working on it, you might get there one day, sorry, can`t wait for you.

http://www.theaustralian.com.au/national-affairs/nationals-senator-ron-boswell-p...

"QUEENSLAND Nationals senator Ron Boswell has proposed a national insurance pool to cover flood disasters.
Senator Boswell's proposal, which he hopes to raise with Tony Abbott, is centred on a small impost that would be linked to household insurance policies and collected by government.

The funds would be funnelled into a national pool."

"....is centred on a small impost...."

You were saying, af2r???

Perhaps they should have consulted knee-jerk Tony Abbott first, because he is dead-against such a proposal - which he quickly tarred with his "new tax" political brush...

Personally, I don't think that this black hole insurance issue is confined to flood evens - and I reckon that we need our pollies to either look into implementing a broader national "(Natural) Disaster Levy" and/or to revisit (and re-name) the existing insurance provisions of the Fire Services Levy...

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perceptions_now

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Re: There Are Three Types Of Flood Insurance Coverage,
Reply #37 - Jan 19^th, 2011 at 10:03pm

Can I suggest, the greatest problems related to the current Floods will come when future renewal invitations arrive from insurers and it becomes apparent, whether insurers will continue to cover Flood & related Climate Change risks and if so, at what premium?

In answer, to my own question, can I say, it will soon become apparent that the international re-insurance market will commence moving out of these high impact risks, as worldwide events become more regular and therefore local insurers will not provide those covers, as they would go bankrupt if they provide cover without re-insurance support!

That said, if any assessor or insurer starts requesting documentary evidence (aside from photos of the damaged items, which I strongly recommend), then I suggest you go straight to the external dispute resolution provider, as suggested by qikvtec.

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beware

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Re: There Are Three Types Of Flood Insurance Coverage,
Reply #38 - Jan 20^th, 2011 at 7:15am

perceptions_now wrote on Jan 19^th, 2011 at 10:03pm:

Can I suggest, the greatest problems related to the current Floods will come when future renewal invitations arrive from insurers and it becomes apparent, whether insurers will continue to cover Flood & related Climate Change risks and if so, at what premium?

In answer, to my own question, can I say, it will soon become apparent that the international re-insurance market will commence moving out of these high impact risks, as worldwide events become more regular and therefore local insurers will not provide those covers, as they would go bankrupt if they provide cover without re-insurance support!

That said, if any assessor or insurer starts requesting documentary evidence (aside from photos of the damaged items, which I strongly recommend), then I suggest you go straight to the external dispute resolution provider, as suggested by qikvtec.

I know for a fact that the insurers are going to bypass the assessor and raise the level of immediate payout. The homeowner will probably have to provide documents to support many claims.

The insurance company will than offer a total payout on a claim. If the owner takes the payout than the owner will be responsible for building the property. Of course when the owner goes to rebuild they will be unlikely to find a builder that can build for the money that the payout gave due to price increases on building products, wages OH&S, Super etc as well as the fact that builders will be in short supply considering the amout of work necessary!!

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